Survey shows access to finance is a barrier to start-up in the region
A new survey shows that entrepreneurs in the region believe that access to finance is their biggest barrier to starting a new business, but it really needn’t be as, with the right planning, gaining finance doesn’t have to be as difficult as it may seem.
The survey highlighted the concern, which seems to be one blighting almost half of those surveyed, with the next major concerns being fear of failure and uncertainty of income. These factors seem to affect the decision for a start-up more than other major business factors such as market conditions.
But whilst raising finance can be a daunting prospect, there are lots of ways to aid the process and lots of finance sources to consider.
The best way to raise finance for a business is through existing assets, family or friends. This can be a good way or kick-starting a business or bridging the gap between start-up and the next level of business growth. If this isn’t a viable route and more traditional lending sources are to be investigated, a business plan is an absolute must. No lender would consider funding without some kind of plan with financial forecasting, and it also helps the business owner. A full plan including aims and objectives of the business, why funding is needed, any previous business history, market information and a strategy for sales and growth should be prepared.
With more than a quarter of those surveyed saying they would consider bank lending as a first choice, it is advisable to thoroughly check any terms and conditions as, tying at the business into an inflexible deal could just present problems later on. With lending rates varying significantly, it’s beneficial to seek independent advice if unsure about whether the lending terms are right for the business. This is also particularly pertinent where loans are secured against personal assets.
In the same survey, more than 10 per cent said they’d consider private equity. This kind of funding has gained in popularity in recent years, aided by the decline in bank lending. However, as with bank lending, it’s important to check the terms as some business ‘angels’ can command high returns on their investment.
One area that start-ups sometimes don’t explore is government grants and schemes to help with start up costs, as they feel the criteria or application process might be too convoluted. It is, however, worth looking into as many grants and schemes can be available on a local or regional level.
Seeking business advice from a qualified provider can sometimes seem like an added expense but rewards can be reaped from this approach as it can not only aid with planning, but help avoid any costly mistakes later on.